Correlation Between Sime Darby and First Hydrogen

Can any of the company-specific risk be diversified away by investing in both Sime Darby and First Hydrogen at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sime Darby and First Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sime Darby Bhd and First Hydrogen Corp, you can compare the effects of market volatilities on Sime Darby and First Hydrogen and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sime Darby with a short position of First Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and First Hydrogen.

Diversification Opportunities for Sime Darby and First Hydrogen

0.0

Correlation Coefficient

Sime Darby  First Hydrogen

Pay attention - limited upside

The 3 months correlation between Sime and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Bhd and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp and Sime Darby is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sime Darby Bhd are associated (or correlated) with First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Sime Darby i.e., Sime Darby and First Hydrogen go up and down completely randomly.

Pair Corralation between Sime Darby and First Hydrogen

If you would invest  24.00  in First Hydrogen Corp on December 28, 2024 and sell it today you would earn a total of  16.00  from holding First Hydrogen Corp or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sime Darby Bhd  vs.  First Hydrogen Corp

Sime Darby Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sime Darby Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Sime Darby is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

First Hydrogen Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hydrogen Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, First Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sime Darby and First Hydrogen

The main advantage of trading using opposite Sime Darby and First Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, First Hydrogen can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Hydrogen will offset losses from the drop in First Hydrogen's long position.

The idea behind Sime Darby Bhd and First Hydrogen Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.